House of Fraser lenders call for new funding in exchange for their support
Just days before it launches a company voluntary agreement, lenders to House of Fraser have demanded more funding to be pumped into the struggling department store group.
Senior lenders including HSBC and Industrial & Commercial Bank of China have asked House of Fraser’s Chinese owner to inject up to £70m of new capital into the business, but are concerned over the lack of clarity regarding the financing, according to Sky News.
Sources said the funding will be crucial to the approval of House of Fraser’s CVA proposal, which is due to be presented to creditors next week. If approved, the restructuring deal will allow the retail chain to close a number of its high street stores and cut rents.
If no agreement is reached, House of Fraser would face the prospect of having to call in administrators.
The company is in a race to save its future and its presence in the UK retail market. It employs about 5,000 people directly and 12,500 concession staff. The restructuring will be another blow to a sector that has already seen job cuts at chains including Debenhams, Mothercare and New Look.
A group of landlords and property owners have warned that CVAs are not the solution if retailers fail to complement it with funding and restructuring measures. The recent wave of CVAs across the country has concerned landlords that retailers are taking the process lightly and have announced plans to take action.
On Friday, Mothercare became the latest retailer to announce a CVA. The British nursery retailer’s plan includes a series of measures to refinance its business and to restructure its UK store portfolio.
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